On the Limits of Communication in Multidimensional Cheap Talk: A Comment

Levy, Gilat; Razin, Ronny

doi:10.1111/j.1468-0262.2007.00771.x

Cited by 67 publications

(40 citation statements)

References 7 publications

(9 reference statements)

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“…In fact, the clear intuition from one-dimensional models that large differences in preferences make effective communication impossible still holds. Levy and Razin [61] demonstrate that even in multi-dimensional models, informative equilibria typically do not exist when there is sufficiently strong conflict of interest between the Sender and Receiver. Imagine a two-dimensional model in which the Receiver wishes to minimize the distance between the state and the action and the Sender has a bias of the form (b, 0), so that she agrees with the Receiver's preferences along the second dimension, but has a bias in the first component.…”

Section: Strategic Considerationsmentioning

confidence: 99%

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Giving and Receiving Advice

Sobel

2013

Advances in Economics and Econometrics

102

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This paper reviews literature on communication between informed experts and uninformed decision makers. The research provides some insight into what constitutes a persuasive statement and under what conditions a decision maker will benefit from consulting an expert. I classify the literature along four dimensions: strategic, technological, institutional, and cultural. To the extent that decision makers and experts have different preferences, communication creates strategic problems. Technological considerations describe the domain of uncertainty, the cost of acquiring information, and the cost of manipulating information. The institution determines who has responsibility for making decisions and the rules that govern communication. Cultural factors describe the way in which agents interpret language.

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Section: Strategic Considerationsmentioning

confidence: 99%

“…Faced with this, the Sender is unlikely to report honestly. Indeed, Levy and Razin [61] provide conditions under which large biases rule out informative equilibria even in multidimensional models.…”

Section: Strategic Considerationsmentioning

confidence: 99%

Giving and Receiving Advice

Sobel

2013

Advances in Economics and Econometrics

102

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“…Later, however, a small but growing literature, which studies the situations where the argument of uninformative communication holds or not, has emerged (e.g. Crawford & Sobel 1982;Farrell & Rabin 1996;Levy & Razin 2007;Chen et al 2008;Mullainathan et al 2008;Chakraborty & Harbaugh 2010). The central result that was found was that when signaling is costless and messages cannot be verified the informativeness of a message depends on how similar the agents' goals are.…”

Section: Decision-making Uncertainty and Market Coordinationmentioning

confidence: 91%

Economic Analysis of Knowledge: The History of Thought and the Central Themes

Leppälä

2012

SSRN Journal

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“…Ambrus and Takahashi (2008) point out that Battaglini's full revelation result depends critically on the assumption that the state and policy spaces are unbounded. Levy and Razin (2007) consider a model with a multidimensional state space in which 123 the degree of sender heterogeneity differs across dimensions. They focus on informational spillovers.…”

Section: Related Literaturementioning

confidence: 99%

Rational exaggeration and counter-exaggeration in information aggregation games

2015

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We study an information aggregation game in which each of a finite collection of "senders" receives a private signal and submits a report to the center, who then makes a decision based on the average of these reports. The integration of three features distinguishes our framework from the related literature: players' reports are aggregated by a mechanistic averaging rule, their strategy sets are intervals rather than binary choices, and they are ex ante heterogeneous. In this setting, players engage in a "tug-of-war," as they exaggerate and counter-exaggerate in order to manipulate the center's decision. While incentives to exaggerate have been studied extensively, the phenomenon of counter-exaggeration is less well understood. Our main results are as follows. First, the cycle of counter-exaggeration can be broken only by the imposition of exogenous bounds on the space of admissible sender reports. Second, in the unique pure-strategy equilibrium, all but at most one player is constrained with positive probThe authors are grateful to seminar participants at the University of Washington, Iowa State University, Michigan State University, the University of Cassino (Italy), and the University of California at Berkeley. Qu Tang provided invaluable research assistance. The authors have benefited from conversations with many colleagues, especially Susan Athey, Carlo Russo, Rachael Goodhue, George Judge, Larry Karp, Wolfgang Pesendorfer, Chris Shannon, and Sofia Villas-Boas. We have benefited from thoughtful assessment by the reviewer and editor of this journal. ability by one of the report bounds. Our third and fourth results hold for a class of "anchored" games. We show that if the report space is strictly contained in the signal space, then welfare is increasing in the size of the report space, but if the containment relation is reversed, welfare is independent of the size of the space. Finally, the equilibrium performance of our heterogeneous players can be unambiguously ranked: a player's equilibrium payoff is inversely related to the probability that her exaggeration will be thwarted by the report bounds.

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On the Limits of Communication in Multidimensional Cheap Talk: A Comment

Abstract: We analyze a cheap talk game, a-la Crawford and Sobel (1982), in a multidimensional state and policy space. A feature of the multidimensional state space is that communication on one dimension often reveals information on others. We show how this feature imposes bounds on communication.

Cited by 67 publications

References 7 publications

Giving and Receiving Advice

Giving and Receiving Advice

Economic Analysis of Knowledge: The History of Thought and the Central Themes

Rational exaggeration and counter-exaggeration in information aggregation games

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